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The Endless Pursuit of Equity

February 2, 2017

By Samuel Corwin ’17

Everything should be equitable, right? I think we can all agree on that!

At least that’s how I used to think, prior to attempting to assess equity in the context of a carbon pricing program. Equity is something we have come back to time and again this year during our discussions, as it is one of the primary sticking points. We know a prerequisite to any proposal is the perception of equity. If the program isn’t fair, it is likely destined for failure.

Through our internal conversations on our Bass Connections team and our time at Yale discussing their progress on a carbon charge program, one lesson about equity has started to become evident: with every potential program design, a case can be made for and against how equitable it is.

Yale conducted a pilot program on campus to test four different design mechanisms for a carbon charge program. After the trial period concluded, stakeholders from each of the four design groups were asked to fill out a survey. Regardless of design mechanism, some groups always perceived the game to be rigged against them in some way.

Take, for example, a flat tax program, in which every department is charged the same rate for each ton of CO2 emitted. Larger departments are bound to find this setup inequitable, as they inevitably will have to pay a larger sum in taxes than smaller departments will.

Another option is the revenue-neutral model, such as the one Yale is pursuing. At the end of each year, the total emissions reduction of the university as a whole is set as the baseline against which departments are measured. Say the university’s emissions decline by 2% from one year to the next; each department is expected to also emit 2% less than it did the year before, or it will be taxed for the difference. Yale found this to be one of the most equitable ways to assess emissions, as each department is measured against the same criteria. Not all departments agreed, however, such as those that have been investing in energy efficiency improvements in recent years. Their argument is that since they have already reduced emissions, these investments are essentially serving as a penalty, as they have already reduced consumption, making it more challenging to reduce energy consumption from one year to the next. In contrast, departments that have never considered energy efficiency improvements are well-positioned to reduce consumption by 2% through targeting easy reductions such as energy-efficient lighting, or “low-hanging fruit.”

Before starting this project at the beginning of the year, as I predicted challenges we would face, I vastly underestimated the challenge of equity. With any carbon charge program, some departments will be better positioned to handle the charge than others. The key is mitigating any relative disadvantage as best we can. To accomplish this, we are seeking input from as many stakeholders as possible, in the hopes that all groups can come to a mutual understanding in the context of a carbon charge program.